Misconception #4 – I’m Too Young to Think About Succession Planning
Translation:
“I am bulletproof and have no intention of dying prematurely; I am not interested in enhancing business productivity, profitability and teamwork; the business is all about me; and I am not interested in protecting the value of my business and the welfare of my family.”
Do you realize this is actually what you are saying when you state you are too young to begin succession planning?
Believe it or not, these phrases are commonly muttered by individuals ranging from age 30-70, but typically from younger business owners who feel they are invincible. Some of us may actually have superhero tendencies; however, this should not get in the way of building business value. All too often it takes a tragic event to motivate these individuals to take action with regard to their succession plan and ultimately protecting, maintaining and building value.
Think about it, the vast majority of privately held businesses have more than 80% of their net worth tied up in closely held stock and real estate. Whether you like it or not, your financial well being and that of your family and employees are dependent upon you.
My Kids are Too Young!
Some business owners have procrastination reasons which sound something like: “I have no successor” or “My children are too young.” These may seem like legitimate reasons, but again they are impacting your ability to build business value.
Although your children may be too young to take over the business right now, there are alternatives for addressing these circumstances that will protect, maintain and continue to build business value so that you’ll have things in order by the time they are old enough to enter the business. If this is the situation you are currently in, consider the following:
- Develop and refine your business vision.
- Engage in strategic planning to ensure you have the necessary resources to fulfill your vision, confirm its viability, and get everyone on board and moving in the same direction.
- Identify business performance metrics that are key to your business and industry. Develop milestones to confirm your business is achieving its full potential.
- Identify, lock in and motivate key management; they provide you with your competitive edge.
- Consider using your management team as a bridge to operate the company on an interim basis if you are prematurely incapacitated, by offering meaningful incentives for them to serve in that role.
- Develop family member employment policies to preclude disagreements. When your children are of age and show interest, they know exactly what is expected of them to be considered for employment and their performance expectations as an employee.
- Develop a supporting outside Board of Directors to help manage the business and hold non-family members accountable.
Don’t let a tragic event be the reason you are spurred to take action with regard to a succession plan.
The reality is you are never too young to begin. Many lives are impacted through your business including family, managers, employees, vendors, lenders, etc. There is never a better time to begin than now. By avoiding the process, you are leaving a lot of opportunity on the table for purposeful business growth. The succession planning process prepares your business to take advantage of opportunities you otherwise may not have realized are available to you.
Stating that you are too young to begin succession planning is like saying you are too old to go on vacation.
What are the issues impacting the value of your business?
Contact us to schedule a Phase I diagnostic assessment of your business to find out.
